Correlation Between Harmony Gold and Cumberland Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Cumberland Pharmaceuticals at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Harmony Gold and Cumberland Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harmony Gold Mining and Cumberland Pharmaceuticals, you can compare the effects of market volatilities on Harmony Gold and Cumberland Pharmaceuticals and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Harmony Gold with a short position of Cumberland Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Cumberland Pharmaceuticals.
Diversification Opportunities for Harmony Gold and Cumberland Pharmaceuticals
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Harmony and Cumberland is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals and Harmony Gold is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Harmony Gold Mining are associated (or correlated) with Cumberland Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumberland Pharmaceuticals has no effect on the direction of Harmony Gold i.e., Harmony Gold and Cumberland Pharmaceuticals go up and down completely randomly.
Pair Corralation between Harmony Gold and Cumberland Pharmaceuticals
Assuming the 90 days horizon Harmony Gold Mining is expected to generate 0.94 times more return on investment than Cumberland Pharmaceuticals. However, Harmony Gold Mining is 1.06 times less risky than Cumberland Pharmaceuticals. It trades about 0.08 of its potential returns per unit of risk. Cumberland Pharmaceuticals is currently generating about -0.01 per unit of risk. If you would invest 636.00 in Harmony Gold Mining on September 4, 2024 and sell it today you would earn a total of 314.00 from holding Harmony Gold Mining or generate 49.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 69.23% |
| Values | Daily Returns |
Harmony Gold Mining vs. Cumberland Pharmaceuticals
Performance |
| Timeline |
| Harmony Gold Mining |
| Cumberland Pharmaceuticals |
Harmony Gold and Cumberland Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Cumberland Pharmaceuticals
The main advantage of trading using opposite Harmony Gold and Cumberland Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Cumberland Pharmaceuticals can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cumberland Pharmaceuticals will offset losses from the drop in Cumberland Pharmaceuticals' long position.| Harmony Gold vs. Where Food Comes | Harmony Gold vs. ServiceNow | Harmony Gold vs. Hasbro Inc | Harmony Gold vs. Playtika Holding Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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